Resources

Glossary

Aggressive fund Aggressive funds are invested mainly in shares and/or property with the aim of achieving high growth over a longer timeframe. This is the highest risk option.
Balanced fund Balanced funds are split 50-50 between higher risk investments such as shares and property, and other lower risk investments including cash and fixed investments. This is a medium risk option.
Capital Your investment in a savings scheme.
Cash assets Low-risk assets which are similar to bank deposits or bank bills.
Cash fund Cash funds are low risk and may be a wise option if you're planning to retire in the next few years - but don't expect high growth.
Conservative fund Conservative funds are a low-to-medium risk option. The KiwiSaver default schemes are conservative funds. Usually, about 80% of the fund is in lower risk investments, and about 20% in shares and property.
Contributions The money paid by you or your employer into your KiwiSaver scheme.
Credit rating An independent assessment of a company's ability to meet its financial commitments. Kiwisaver schemes do not have credit ratings yet. However, some companies providing schemes have ratings. While the rating does not directly apply to individual schemes it may give some indication of the financial strength of the provider.
Default scheme The KiwiSaver scheme you'll be enrolled in if neither your nor your employer chooses one. There are six default providers, each with one default scheme. All default schemes are conservative.
Defensive assets These include cash, fixed interest investments and mortgages. They're lower risk but generally earn a lower return.
Equities A generic term for shares - generally in publicly listed companies.
Estate Assets that are passed on when you die.
Fee subsidy A $20 payment made twice yearly to subsidise the fees charged by KiwiSaver providers.
First home deposit subsidy A subsidy of up to $5000 over five years for some first home buyers who are saving in KiwiSaver, administered through Housing NZ and due for introduction in 2010.
Fixed interest Typically bank deposits or similar which have a longer maturity term than 90 days.
Growth assets Shares, property and other investments that have potential to earn higher returns but also carry higher risk.
Growth fund Growth funds are usually about 80% shares and property, and 20% in lower risk investments such as cash and fixed interest. This is a medium-high risk option.
Household income test To get the first home deposit subsidy your before-tax household income must be under $100,000 (for 1-2 people) or $140,000 (for 3 or more people).
Independent financial advice Advice from a trusted, professional financial advisor - this is essential before you decide on a savings scheme.
Investment Money placed in an asset with the aim of getting a return (which may be in the short-, medium-. or long-term).
Mortgage diversion From 2009 some KiwiSaver schemes will allow you to divert part of your contributions to pay off your home mortgage. You can only do this after you've been in the scheme for 12 months.
Portfolio A collection of investments such as shares, property etc.
Provider A company approved by the Government Actuary to provide KiwiSaver schemes.
Return Profit or loss on your investment - usually expressed as a percentage. A higher return usually means a higher risk.
Risk The probability that an investment will fail and you'll lose part or all of your capital. A higher return usually means a higher risk.
Risk profile Your personal perception of the inherent risk of an asset.
Scheme A savings product offered by a KiwiSaver provider.
Tax credit A government rebate offered annually to most taxpayers for contributing to a KiwiSaver scheme.
Tax rate For savings schemes, either 19.5% or 30% of income, depending on your salary and income from investments.

Important

Like you, we can't predict the future - which means we can't guarantee the performance of any savings scheme. Nor do we endorse any specific KiwiSaver provider or scheme. ConsumerSaver is a good starting point - but, before you commit, we strongly suggest you seek independent financial advice. See our full disclaimer.